SB2430sam001 102ND GENERAL ASSEMBLY

Sen. Bill Cunningham

Filed: 4/8/2021

10200SB2430sam001 LRB102 10351 HLH 24280 a

AMENDMENT TO SENATE BILL 2430

AMENDMENT NO. ______. Amend Senate Bill 2430 by replacing everything from line 13 on page 13 through line 3 on page 16 with the following:

"(11.5) Investment partnership.

(A) For tax years ending before January 1, 2021, the The term "investment partnership" means any entity that is treated as a partnership for federal income tax purposes that meets the following requirements:

(i) no less than 90% of the partnership's cost of its total assets consists of qualifying investment securities, deposits at banks or other financial institutions, and office space and equipment reasonably necessary to carry on its activities as an investment partnership;

(ii) no less than 90% of its gross income consists of interest, dividends, and gains from the sale or exchange of qualifying investment securities; and

(iii) the partnership is not a dealer in qualifying investment securities.

(A-5) For tax years ending on or after January 1, 2021, the term "investment partnership" means any entity that is treated as a partnership for federal income tax purposes that meets the following requirements:

(i) no less than 90% of the partnership's cost of its total assets consists of qualifying investment securities, deposits at banks or other financial institutions, and office space and equipment reasonably necessary to carry on its activities as an investment partnership; and

(ii) no less than 90% of its gross income consists of interest, dividends, gains from the sale or exchange of qualifying investment securities, and the distributive share of partnership income from lower-tier partnership interests meeting the definition of qualifying investment security under subparagraph (B)(xiii); gross income does not include income from partnerships that are operating at a federal taxable loss.

(B) For purposes of this paragraph (11.5), the term "qualifying investment securities" (other than, for tax years ending on or after January 1, 2021, securities with respect to which the taxpayer is required to apply the rules of Internal Revenue Code Section 475(a)) includes all of the following:

(i) common stock, including preferred or debt securities convertible into common stock, and preferred stock;

(ii) bonds, debentures, and other debt securities;

(iii) foreign and domestic currency deposits secured by federal, state, or local governmental agencies;

(iv) mortgage or asset-backed securities secured by federal, state, or local governmental agencies;

(v) repurchase agreements and loan participations;

(vi) foreign currency exchange contracts and forward and futures contracts on foreign currencies;

(vii) stock and bond index securities and futures contracts and other similar financial securities and futures contracts on those securities;

(viii) options for the purchase or sale of any of the securities, currencies, contracts, or financial instruments described in items (i) to (vii), inclusive;

(ix) regulated futures contracts;

(x) commodities (not described in Section 1221(a)(1) of the Internal Revenue Code) or futures, forwards, and options with respect to such commodities, provided, however, that any item of a physical commodity to which title is actually acquired in the partnership's capacity as a dealer in such commodity shall not be a qualifying investment security;

(xi) derivatives; and

(xii) a partnership interest in another partnership that is an investment partnership; and .

(xiii) for tax years ending on or after January 1, 2021, a partnership interest which, in the hands of the partnership, qualifies as a security within the meaning of Section 2(a)(1) of the federal Securities Act of 1933.".